Is our inventory of homes improving?
There is a significant transition in our inventory of homes that is taking place in the Northern Colorado market.
There is now more inventory on the market at this time of year than at any time since 2020.
2020 marked a turning point in the market where both interest rates and inventory plummeted.
For many years, the market has been working to get back to pre-COVID levels of inventory. It finally happened.
However, inventory is still well below 2017, 2018, and 2019 levels. This means there is nothing resembling a ‘glut’ of inventory. But this milestone is significant.
A “normal” amount of housing inventory is typically defined by the balance it creates in the market. Traditional wisdom states that a real estate market needs 5 to 6 months of housing supply to be considered balanced1. This means that if no new homes were listed, it would take 5 to 6 months for the current inventory to sell, given the current pace of sales. This balance ensures that the market is not leaning too heavily in favor of either buyers or sellers.
In recent years, inventory levels have been lower than this benchmark, contributing to a seller’s market with higher demand and faster sales, but fewer options for buyers. The market dynamics can vary based on location, economic conditions, and other factors, so the “normal” level can fluctuate.